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CEMETERY OVERSIGHT TASK FORCE MEETING

Thursday, September 10, 2009

2:00 p.m.

Held at: Thompson Center

Chicago, Illinois

Cemetery Oversight Hearing September 10, 2009

Tel: (312) 386-2000 (800) 868-0061

Merrill Legal Solutions

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1 CEMETERY TASK FORCE COMMITTEE:

2 HONORABLE PATRICIA BROWN HOLMES,

3 Chairperson

4 DR. BYRON BRAZIER,

Apostolic Church of God

5

MR. AUGUSTUS CAGE,

6 Cage Memorial Chapels

7 MR. WILLIE CARTER,

Restvale Cemetery

8

MR. LESTER CONEY,

9 Mesirow Financial

10 MR. MICHAEL KOTZIN,

Jewish United Fund and The Jewish

11 Federation of Metropolitan Chicago

12 MR. WILLIAM McNARY,

Citizen Action Illinois

13

MR. DALITSO SULAMOYO,

14 Illinois Community Action Association

15 MS. ANDREA ZOPP,

Exelon Corporation

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SENATOR EMIL JONES, III,

17 14th Senate District of Illinois

18 SENATOR RANDY HULTGREN,

48th Senate District of Illinois

19

REPRESENTATIVE DAN BRADY,

20 88th House District of Illinois.

21 REPRESENTATIVE MONIQUE DAVIS,

27th House District of Illinois.

22

REPRESENTATIVE KEN DUNKIN ,

23 5th House District of Illinois.

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Tel: (312) 386-2000 (800) 868-0061


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1 SPEAKERS

2 LISA MADIGAN,

3 Illinois Attorney General Page 8

4

5 DANIEL W. HYNES,

6 Illinois Comptroller Page 51

7

8 SONJA WASHINGTON,

9 Public consumer Page 136

10

11 ROBERT GILLIGAN Page 152

12 FATHER PAT POLLARD Page 154

13 Catholic Cemeteries

14

15 VICKIE HAND Page 183

16 HARVEY LAPIN Page 185

17 Illinois Cemetary & Funeral Home

18 Association

19

20

21

22

23

24


Tel: (312) 386-2000 (800) 868-0061


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1 HONORABLE HOLMES: Good afternoon, everyone.

2 Welcome to the fifth meeting of the Cemetary

3 Oversight Task Force.

4 My name is Patricia Brown Holmes, and I

5 am honored to have been appointed chair of this

6 task force by Governor Pat Quinn. As many of you

7 know, I'm a partner at the law firm, Schiff

8 Hardin, and was previously a judge on the Circuit

9 Court of Cook County as well as a former federal,

10 state, and local prosecutor.

11 I'd like to introduce the members of our

12 task force in alphabetical order beginning with

13 our Secretary of the Department of Financial and

14 Professional Regulation, Secretary Brent Adams.

15 We have task force member, Damon Arnold,

16 who is the Director of the State's Department of

17 Public Health.

18 Dr. Byron Brazier, who is the Pastor of

19 Apostolic Church of God.

20 Mr. Augustus Cage, who is the President

21 and Director of Cage Memorial Chapels.

22 Mr. Willie Carter, who is the owner of

23 Restvale Cemetery in Alsip, Illinois.

24 Mr. Lester Coney, who is the Executive


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1 Vice President of Mesirow Financial.

2 Mr. Michael Kotzin, who is the Executive

3 Vice President of the Jewish United Fund and the

4 Jewish Federation of Metropolitan Chicago.

5 Member William McNary, who is the

6 Codirector of Citizen Action Illinois and

7 President of U.S. Action.

8 Member Dalitso Sulamoyo, who is the

9 President and CEO of the Illinois Community Action

10 Association.

11 Ms. Andrea Zopp, who is Vice President

12 and General Counsel of the Exelon Corporation.

13 We have several legislative ombudspersons

14 to our task force.

15 Appointed by the President of the Senate

16 is Senator Emil Jones, III, representing the

17 14th Senate District of Illinois.

18 Appointed by the Senate Minority Leader

19 is Senator Randy Hultgren, representing the 48th

20 Senate District of Illinois.

21 Appointed by the minority -- House

22 Minority Leader, Representative Dan Brady, who

23 represents the 88th House District of Illinois.

24 Representative Monique Davis, who


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2 And Representative Ken Dunkin, who


4 On July 16th, Governor Quinn signed

5 Executive Order 16 which formed this task force.

6 This task force was formed in the wake of the

7 recent tragic events at Burr Oak Cemetery which

8 have highlighted a deficiency in our current

9 mechanisms for regulating and overseeing the

10 operation and management of cemeteries.

11 Our mission is to, by September 15th of

12 this year, conduct a comprehensive review of

13 Illinois' present structural arrangement for

14 regulating cemeteries and the circumstances

15 surrounding the recent tragic events at Burr Oak

16 Cemetery.

17 Our second responsibility is to submit a

18 report of our findings to the Governor and to the

19 Secretary of the Department of Financial and

20 Professional Regulations. The report will provide

21 detailed recommendations on policies, laws, rules

22 and regulations that should be implemented to

23 ensure that the deceased are cared for in a humane

24 and respectful manner.


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1 This will be our fifth and final group

2 meeting. Our next meeting is scheduled for

3 September 15th at 12:30 when we will issue our

4 report. That time -- the date is firm; the time

5 is tentative. If it changes, we will post the

6 changed time on the web site at

7 www.cemeterytaskforce.illinois.gov.

8 We will begin calling witnesses to

9 testify today. We will call them in the order of

10 advance notice, those individuals who have

11 indicated their intent to testify being called

12 first followed, if there is time, by individuals

13 who have indicated a willingness to testify on

14 today's date.

15 Our order of testimony will be as

16 follows: First, our Illinois Attorney General,

17 Lisa Madigan. Next, our Illinois Comptroller, Dan

18 Hynes. Next, Sonja Washington, a public consumer.

19 Followed by Robert Gilligan and Father Pat Pollard

20 of Catholic Cemeteries. Followed by Vickie Hand

21 and Harvey Lapin of Illinois Cemetary & Funeral

22 Home Association, and then other interested

23 parties as time permits.

24 We will begin by calling our first


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1 witness, our Illinois Attorney General, Lisa

2 Madigan.

3 Thank you so much for agreeing to

4 testify.

5 ATTORNEY GENERAL MADIGAN: I can carry on?

6 HONORABLE HOLMES: You can carry on. But we

7 first ask that you state your name and spell it

8 for our court reporter.

9 ATTORNEY GENERAL MADIGAN: I'd be happy to do

10 so.

11 HONORABLE HOLMES: Thank you.

12 ATTORNEY GENERAL MADIGAN: My name is Lisa

13 Madigan, L-I-S-A, M-A-D-I-G-A-N, and I am the

14 Illinois Attorney General.

15 Let me thank the task force for inviting

16 me to testify here today. As all of us are

17 painfully aware, what took place at Burr Oak

18 Cemetery is a complete and total tragedy.

19 When we lose a loved one, we should be

20 able to rely on the services provided by funeral

21 homes and cemeteries to provide us with comfort

22 and with peace of mind. But with the tragedy that

23 occurred at Burr Oak, not only did all of the

24 families have to go through this tragedy, but they


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1 lost that peace of mind. They were violated.

2 There was a terrible sense of loss, and they will

3 now have to deal with all of this in the

4 aftermath.

5 We can't allow this to happen again,

6 which is why I'm very happy, not only that I've

7 been asked to testify, but that all of you have

8 been willing to make the time and to make the

9 effort to listen to what those of us who see some

10 of the problems can give you some suggestions as

11 to what we can do in the future. So your work to

12 review the cemetery and funeral industry in

13 Illinois and to propose reforms to protect all of

14 our families is absolutely critical.

15 I know that you have a very full agenda

16 today, and you've already heard testimony from a

17 lot of witnesses, so it is my intent to be brief.

18 As you probably know, my office responded

19 to the tragic events at Burr Oak Cemetery by

20 filing a lawsuit on behalf of the People of the

21 State of Illinois and the Comptroller of the State

22 of Illinois. That lawsuit was filed against the

23 corporate owners of Burr Oak as well as Cedar Park

24 Cemeteries, and that corporate entity is Perpetua


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1 Holdings of Illinois.

2 Our lawsuit charges that Burr Oak

3 defrauded consumers and violated the state laws

4 regulating cemeteries. The Cemetery Care Act, the

5 Pre-Need Cemetery Sales Act and the Funeral or

6 Burial Funds Act. All of our claims are based on

7 the same deceptive scheme that you have heard so

8 much about. The employees of Burr Oak took

9 payments from consumers for cemetery plots and

10 burial services, falsely promising that the

11 deceased would be buried with dignity and their

12 plots would be maintained. Violating these

13 promises, the employees desecrated grave sites,

14 removed remains, and illegally buried remains in

15 others' graves. As part of this scheme, the

16 employees failed to place in trust the funds

17 received for the care of cemetery plots and for

18 future burials.

19 Our suit is in the Circuit Court of Cook

20 County. It has been consolidated with a number of

21 other cases that have been filed regarding Burr

22 Oak. And, again, our suit seeks to hold Burr Oak

23 accountable for the dreadful conduct that took

24 place there. We asked the Court to immediately


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1 appoint a receiver to take over the cemetary, and

2 as you probably know, the Court did appoint Roman

3 Szabelski, the Executive Director of the Catholic

4 Cemeteries as a receiver, and he has been

5 overseeing the cemetery since July 16th.

6 The receiver is working with law

7 enforcement and families to sort out the situation

8 and to begin to repair the awful damage that has

9 been done. His initial task has been to assess

10 the situation, to respond to inquiries from

11 families, and then to formulate a plan to

12 stabilize the cemetery.

13 The Court, as you may have heard, has

14 recently allowed the receiver to access $50,000

15 from the cemetery's Perpetual Care Fund to ensure

16 that cemetery staff are in place to perform

17 critical work.

18 At this point -- again, you probably know

19 this, but at this point the cemetery is still

20 considered to be an active crime scene by the

21 Sheriff's Office, so no burials have taken place

22 since the cemetery has been closed and visitors

23 are not allowed.

24 It is my understanding that part of the


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1 receiver's critical focus right now is in working

2 with law enforcement and the funeral directors to

3 get the cemetery in a position where burials and

4 people who own plots can in fact resume.

5 With the receiver in place, the lawsuit

6 is essentially going to proceed on two tracks.

7 First, I expect that we will be routinely working

8 with the Court to make sure that the work of the

9 receiver is moving forward expeditiously and

10 appropriately. And, second, we will be continuing

11 to conduct discovery to obtain as much information

12 as possible about Perpetua Holdings. Our goal is

13 to establish who controlled the cemetery and who

14 financially benefited from the cemetery, and we

15 will go as far up the corporate ladder as we need

16 to. And our goal is to recover money, to recover

17 money for the families who have been defrauded,

18 for the repair of the cemetery, as well as for

19 penalties for this terrible conduct.

20 While Burr Oak represents the most

21 egregious cemetery case that we have handled, we

22 are involved in other cemetery and funeral home

23 matters. We tend to become involved in two

24 different ways. First, we have consumers that


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1 reach out to us and file consumer fraud

2 complaints. Every year we receive an average of

3 70 complaints regarding cemeteries, funeral homes,

4 and monument companies. Let me put that in

5 context for you. 70 complaints on average out of

6 a total last year we got 33,335 total consumer

7 fraud complaints.

8 And let me give you the examples of the

9 typical complaints. In the case of cemeteries, we

10 receive calls often about the upkeep of grave

11 sites and maintenance, and we also receive calls

12 about issues with pre-need contracts, in

13 particular when people want to cancel or there is

14 confusion over the pre-need contract.

15 For funeral homes -- and I know this is

16 another issue you're supposed to be addressing --

17 consumers who call us have complaints about the

18 failure of the funeral home to provide promised

19 services, the quality of the products or services,

20 or confusion about the costs of services.

21 In the case of businesses selling grave

22 markers or monuments, the consumers who contact us

23 almost always have not received the product that

24 they have paid for.


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1 In response to these consumer complaints,

2 we work with the consumers to mediate and resolve

3 the disputes and sometimes we file lawsuits. We

4 also pass the information on to the Comptroller's

5 office so that they can work with the consumers

6 and take any appropriate regulatory action.

7 The second way that we become involved in

8 these issues is through referrals of cases from

9 the Comptroller's office. When the Comptroller

10 cannot resolve financial irregularities or has

11 begun or even completed a license revocation

12 proceeding, he refers cases to my office. In

13 these lawsuits, we seek to prevent that person or

14 that company from engaging in further cemetery or

15 funeral home business in Illinois. We also seek

16 usually an order preventing the cemetery or the

17 funeral home from using money held in trust

18 accounts, and we often seek the appointment of a

19 receiver to oversee the cemetery or the funeral

20 home and to protect the funds as well as seeking

21 recovery of consumers of their money in the trust

22 funds.

23 Based on our office's experience in the

24 Burr Oak case and other cemetery and funeral home


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1 cases, let me offer the following recommendations

2 for you to consider as how to strengthen the

3 process for regulating this industry and

4 protecting Illinois consumers. My recommendations

5 will likely echo some that you've already heard,

6 but let me go through what I think would be some

7 good ideas.

8 First, the cemetery industry obviously

9 needs to be subject to comprehensive regulation

10 here in the State of Illinois. This should

11 include the licensing of cemeteries as well as the

12 licensing of people who manage the day-to-day

13 operations of the cemetery and the people who sell

14 all cemetery goods and services, pre-need as well

15 as at-need services.

16 The licensing requirement should extend

17 to all cemeteries and be similar in structure to

18 the licensing schemes that apply to other

19 regulated professions. As part of the license

20 application, an applicant should be required to

21 disclose any prior criminal, civil, or

22 disciplinary actions taken against them in other

23 states, and I believe that the license should also

24 have to be renewed annually.


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1 In addition to licensing, the state

2 entity regulating cemeteries should be charged at

3 the very least with conducting routine,

4 unannounced inspections of cemeteries, mandating

5 training for all cemetery employees, and creating

6 maintenance standards.

7 If our ultimate goal is enforcement of

8 the laws regulating cemeteries, then a requirement

9 of annual cemetery inspections is particularly

10 critical.

11 Second, we must ensure transparency in

12 the ownership and control of cemeteries. We need

13 to be sure that state regulators know who benefits

14 financially from a cemetery and who controls the

15 operations because we must be able to hold those

16 entities and those people responsible when

17 something goes wrong.

18 Third, we need to enhance protections for

19 consumers. You may know this, but if you don't,

20 the Federal Trade Commission has a rule that

21 actually requires funeral homes to disclose all

22 costs to consumers. So for example, the rule

23 requires that a funeral home give the consumer an

24 itemized price list. So this will help the


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1 consumer comparison shop. It will also help the

2 consumer understand exactly what they are

3 purchasing, what they need to purchase.

4 I believe that we should create -- and we

5 can do it at the state level. We need to create a

6 similar requirement for cemetery goods and

7 services.

8 Consumers should receive clear,

9 large-print disclosures that assist them in

10 understanding the terms of their pre-need or

11 at-need contracts. So, again, this should include

12 the costs. It should include the type and length

13 of the interment rights that they are purchasing

14 as well as the location of the burial plot.

15 Consumers should also be encouraged to

16 deal not only with funeral directors but also

17 directly with the cemetery. So they should view

18 the plot before purchase, and they should obtain

19 written documentation of the contract from the

20 cemetery.

21 Fourth, as I know this task force has

22 discussed with a number of witnesses, plot numbers

23 and identifying information needs to be recorded,

24 either on the death certificate or on publicly


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1 available maps and plats. We have to make sure

2 that families have the plot number and that it is

3 easy to obtain this information long after the

4 burial has taken place.

5 Finally, I think that you should

6 consider, as you have discussed at other hearings,

7 amending the Crime Victim's Compensation laws to

8 ensure that families whose loved one's remains

9 have been disturbed can afford to rebury them

10 appropriately.

11 I hope that these suggestions can assist

12 you as you put together your final

13 recommendations. I would be pleased to continue

14 to work with you on these important issues, and I

15 thank you for inviting me to testify today.

16 HONORABLE HOLMES: Thank you very much.

17 Now if you'll give us a few minutes to

18 entertain questions.

19 ATTORNEY GENERAL MADIGAN: Sure.

20 HONORABLE HOLMES: Start to my right. Do we

21 have questions at this end?

22 Representative Brady.

23 REPRESENTATIVE BRADY: Thank you very much,

24 Madam Chair.


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1 Madam Attorney General, thank you for

2 being here. Appreciate your testimony.

3 I think you're aware of my background in

4 the funeral and former coroner profession that I

5 served for many years in my adult life. And I

6 wanted to ask about you mentioned some consumer

7 fraud complaints dealing specifically related to

8 cemeteries and/or funeral homes approximately 70

9 out of the 33,000 and some that your office

10 receives.

11 Do you pursue those yourself -- I mean

12 through your office -- or do you turn those over

13 to the Comptroller's Office immediately who is

14 charged with the duty of the Cemetery Care and

15 Burial Trust Fund of the State?

16 THE WITNESS: We do both. It depends what the

17 complaint is. Obviously it's a factual

18 determination. So if it's somebody who's having,

19 you know, a difference of opinion or a complaint,

20 it is typical in the consumer fraud area. You

21 know, I thought I was gonna be charged X number of

22 dollars. Now they're telling me it's gonna be

23 more dollars. That's something we typically see.

24 We will probably open a mediation on that and try


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1 to resolve that between the parties.

2 If it is something that has to do with an

3 area that the Comptroller's Office has some

4 authority over, we send a copy of that over to

5 them as well so that they're aware of what we're

6 receiving. So in the normal course, although it

7 is not statutorily required, we will alert the

8 Comptroller's Office when we receive complaints

9 that fall into the -- their jurisdiction as well.

10 REPRESENTATIVE BRADY: So even though you're

11 not charged with the duties of maintaining

12 cemetery care and burial trust funds in the state,

13 probably from your Consumer Fraud Division, you

14 receive from the general public these complaints

15 just because they are going to the Attorney

16 General's Office. It seems like the thing to do

17 for the public --

18 THE WITNESS: Sometimes.

19 So for cemeteries -- let me break down

20 for you again what we hear. We hear complaints

21 about the upkeep of the cemetery itself. We hear

22 complaints about facilities, staffing, gravesite

23 services, how that went and complaints about

24 pre-need contracts, cancellation problems,


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1 record-keeping problems. Now, obviously when it

2 is something that contends with maintenance,

3 pre-need contracts, we'll send that on as well to

4 the Comptroller's Office.

5 We also get complaints -- and this is not

6 uncommon -- about rudeness, poor employee

7 attitude, you know, one of the reasons for

8 recommending that the training take place, you

9 know, but that's general consumer service. I

10 don't know if we routinely send those over to the

11 Comptroller's Office, but that's a very small

12 percentage of complaints. But that's what we tend

13 to cover.

14 REPRESENTATIVE BRADY: The 50,000 that was

15 released by the Courts in regards to the cemetery

16 trust funds for the purpose of trying to help in

17 the situation and the receivership position,

18 you've got a lawsuit that you've filed through

19 your office. I'm assuming in Cook County the

20 State's Attorney's Office has filed and will

21 follow through with the criminal charges against

22 the individuals that have been charged. You're

23 seeking more civil litigation to this area; is

24 that correct?


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1 ATTORNEY GENERAL MADIGAN: It is exactly

2 correct. So our lawsuit filed on behalf of the

3 People of the State of Illinois and the

4 Comptroller contends with the civil penalties that

5 are available against the owners of Burr Oak and

6 Cedar Park. And so it is filed essentially under

7 four Illinois statutes: The Cemetery Care Act,

8 the Pre-Need Cemetery Sales Act, the Illinois

9 Funeral or Burial Funds Act, and the Illinois

10 Consumer Fraud Act. But it's all civil.

11 REPRESENTATIVE BRADY: Do you think -- if

12 memory serves me correctly, we have some 33

13 sections of statute that deals with cemeteries,

14 funeral homes, funeral directors, embalmer's

15 license, et cetera, everything from the state

16 level to the municipal level to the township

17 level. Do you think it's more of an issue of new

18 laws that are needed or enforcement of existing

19 laws on the books?

20 ATTORNEY GENERAL MADIGAN: I think it's both.

21 REPRESENTATIVE BRADY: Okay. And in some of

22 the suggestions that you made, they sound very

23 familiar to me. Some legislation I've tried to

24 advance. So maybe I'll solicit your help this


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1 time to the legislature. Maybe we can partner

2 together and get it done.

3 THE WITNESS: You know, I will always be happy

4 to help you, Representative.

5 REPRESENTATIVE BRADY: Thanks. I should have

6 started with you first. Thank you.

7 HONORABLE HOLMES: Representative Davis.

8 REPRESENTATIVE DAVIS: Thank you very much.

9 Glad to see you, Madam Attorney General.

10 I know that this has been an awesome task

11 for you in filing the criminal complaint. But my

12 question is --

13 ATTORNEY GENERAL MADIGAN: Let me -- let me

14 interrupt. It is the State's Attorney's Office.

15 So Anita Alvarez has authority over the criminal

16 statutes, and so she's the one who's filed the

17 criminal indictment. I -- what I have done and

18 what we have authority over out of the Attorney

19 General's Office are the civil penalties that are

20 in our statutes. So we have a civil complaint,

21 not criminal complaint.

22 REPRESENTATIVE DAVIS: Okay. My question is,

23 I know you've looked at the -- what do you call

24 it? The results of conviction, you know, what the


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1 penalties will be. Do you think they're adequate?

2 And then also I see one here where the

3 Human Skeletal Remains Protection Act requires if

4 anybody discoveries a skeletal remain they're to

5 report it to the coroner, and most people who are

6 visiting a grave or cemetery, they wouldn't even

7 know to report this to a coroner.

8 So I know that you've given many

9 suggestions as to what we should do in filing our

10 report, but do you think that some of these

11 penalties should be increased perhaps?

12 ATTORNEY GENERAL MADIGAN: I certainly think

13 that some of these penalties would be ripe for

14 increasing, particularly in this environment and

15 what we're contending with right now. Now what

16 you point to in terms of this Human Skeletal

17 Remains Protection Act, it is a criminal statute.

18 And, again, one of my suggestions was

19 training. And so if we are not training or

20 requiring training of the people who work at

21 cemeteries, they would have -- and let's assume,

22 you know, they are more likely to encounter this

23 situation, finding skeletal remains, those are the

24 people who need to know that that is a criminal


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1 violation if there's a failure to report. They

2 should be trained, not only in this statute, but

3 in the other laws that cover cemeteries and

4 burials. And you would like to believe that there

5 would be, at a minimum, a deterrent effect if

6 employees of cemeteries knew what the laws were as

7 opposed to never requiring them to know what the

8 penalties would be for violating laws.

9 REPRESENTATIVE DAVIS: Well, some of the

10 testimony we received was that as a few people

11 visited the cemetery in Alsip, that they did see

12 some remains, and they reported it to the police.

13 And I don't know that the police knew that they

14 should report it to the coroner. So I think this

15 is a section of the law perhaps that we really

16 need to change.

17 And my thought is perhaps on -- for

18 example, in the funeral director, they give them a

19 sheet with a list of things to expect from the

20 funeral director, what the charges are, and

21 perhaps with the cemetery, we can also have a list

22 of things, if you look for it and you see anything

23 that's untoward, here's your reporting number, and

24 this is where you would report this to.


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1 ATTORNEY GENERAL MADIGAN: I think it would be

2 very useful in terms of any documentation, maybe

3 include on the contract that is given to the

4 consumer when they purchase either funeral

5 services, burial and cemetery services -- goods or

6 services, that there is a point of contact in

7 addition to that funeral home or that cemetery, a

8 government entity, whether it is, you know, IDFPR

9 or the Comptroller's office -- you all can decide

10 who should oversee all of this -- so they know

11 there is another entity, or the coroner, where

12 information should be reported. Absolutely.

13 REPRESENTATIVE DAVIS: And do you agree that

14 the family should be required to visit the

15 cemetery and make the arrangements themselves?

16 ATTORNEY GENERAL MADIGAN: I don't think they

17 should be required to. I think they should -- I

18 think it's a very good idea, and they should be

19 strongly encouraged to not just interact with the

20 funeral director but also go to the cemetery and

21 to make sure that, again, what they are purchasing

22 for their loved one is what they want, is where

23 they want, and so they will have knowledge of that

24 location and be able to go through what the costs


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1 are going to be with the cemetery as well as

2 whatever sort of funeral services and goods

3 they'll need.

4 REPRESENTATIVE DAVIS: Well, I kind of think

5 it should be mandated. Because in the

6 African-American community, it is tradition that

7 the funeral director does it all and that it is

8 the funeral director who supposedly gives the

9 needs or requests from the family to the cemetery

10 rather than, you know, it being direct contact.

11 That's just my opinion that I would strongly

12 enforce on this task force.

13 Thank you.

14 ATTORNEY GENERAL MADIGAN: Pleasure.


16 MR. McNARY: General Madigan, I'm William

17 McNary with Citizen Action Illinois.

18 Let me, first of all, thank you, not only

19 for your important and timely recommendations to

20 this panel on this issue, but your history of

21 outstanding public service and consumer protection

22 as Attorney General.

23 Like you, we believe that every human

24 being is entitled to live a meaningful and


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1 fulfilling life and has -- is entitled to dignity

2 and respect and honor, and that dignity, respect,

3 and honor should follow them when they're laid to

4 their rest.

5 You mentioned a series of

6 recommendations. The first question I have, since

7 I didn't hear the last one, that many of the crime

8 victims -- could you repeat that one again?

9 That's the first question.

10 ATTORNEY GENERAL MADIGAN: There's a Crime

11 Victim's Compensation Act here in the State of

12 Illinois that allows victims of violent crimes in

13 general to be able to recover money for expenses

14 they don't have insurance to cover. So it tends

15 to be available for funeral and burial expenses

16 and in homicide cases.

17 So the concern here is that families,

18 through no fault of their own, have now been --

19 become crime victims. So the tragedies that have

20 occurred at Burr Oak where, hopefully, there will

21 eventually be identification of remains, and then

22 there will be a cost to re-interring these

23 remains. Whose gonna pay for that?

24 Now, it would be my belief, and obviously


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1 one of the things that the State is doing in

2 pursuing a civil lawsuit against Perpetua

3 Holdings, is that we will have the resources to

4 pay for that, as they should be required to do.

5 But we will probably also have a situation where

6 we will want to have this done possibly before not

7 just the State of Illinois' lawsuit, but there are

8 probably at this moment I'm going to say

9 approximately 25 lawsuits. And so before those

10 lawsuits end, there will be family members who

11 need the resources to bury their family members

12 properly.

13 And so we, the legislature, should

14 seriously consider looking at amending the Crime

15 Victim's Compensation Act so that families in this

16 circumstance would be eligible for compensation.

17 MR. McNARY: We understand that Perpetua not

18 only owns Burr Oaks Cemetery, but it owns also

19 Cedar Park Cemetery. And my understanding is that

20 cemetery is still in operation; is that correct?

21 ATTORNEY GENERAL MADIGAN: Yes. They are

22 still in operation. They're still burying --

23 they're still burying people there.

24 I know we've been out there. I know


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30

1 others have been out there. But they are part of

2 the lawsuit as well because they are owned by the

3 same company.

4 MR. McNARY: So we have a situation that the

5 people who perpetrated the tragedy on the families

6 of Burr Oak are now still being allowed to operate

7 Cedar Park Cemetery, the same company?

8 ATTORNEY GENERAL MADIGAN: No. The receiver

9 is now -- I'm correct? No. I'm not correct.

10 My understanding is Cedar Park is still

11 running. So let's do it -- let's look at it in a

12 big box.

13 You've got Perpetua Holdings. Perpetua

14 Holdings owns both Burr Oak and Cedar Park. The

15 receiver is over Burr Oak. We don't have a

16 receiver over Cedar Park. Cedar Park is still

17 running, but not with a receiver.

18 Yes, the same corporate entity still owns

19 it, but it is not the same individuals. Does that

20 make sense? It's the same individuals at the

21 cemetery level. But at the corporate level the

22 answer is, yes, they are still owned by the same

23 corporate entity.

24 Are you following?


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31

1 MR. McNARY: So that -- I think so. So that

2 means that if this lawsuit is successful, then the

3 compensation from the Cedar Park Cemetery could

4 also be used, or that's just a separate

5 corporation -- you're saying that's a separate

6 corporation.

7 I guess the concern from a lot of

8 testimony that we've heard is that how is it --

9 and I don't know if there's anything legally that

10 can be done about it -- but how is it that those

11 people who own the cemetery which perpetuated the

12 tragedy against the people in Burr Oaks can still

13 be allowed to profit in this state by still

14 running another cemetery.

15 So I don't know if you have any comment

16 on that, but that is a recurring theme that keeps

17 coming up at this hearing.

18 ATTORNEY GENERAL MADIGAN: And what we're

19 attempting to do is I went through with our

20 lawsuit. One of the things we're attempting to do

21 is obviously to identify who are the individuals

22 who are financially benefiting? Who are the

23 individuals who were operating? When I say that,

24 I don't mean just at the Burr Oak level. I mean


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1 one level above the company that owns them, this

2 Perpetua Holdings. So that's what we're

3 attempting to identify to go after the assets that

4 way, not to go after the assets necessarily

5 because they should be in separate funds. So I

6 hope that makes a little bit of sense to you.

7 MR. McNARY: Thank you.

8 HONORABLE HOLMES: Do I understand you

9 correctly in answering Mr. McNary's question that

10 although there is one ownership or parent owner,

11 there are two managers? The manager of Cedar Park

12 is separate and apart from the receiver who is

13 operating Burr Oak at this time; is that correct?

14 ATTORNEY GENERAL MADIGAN: That is correct.

15 MR. McNARY: Lastly, you've -- of the date

16 recommendations that I talked about, you mentioned

17 all of them except one, and I just wonder if you

18 had any comment on whistle-blower protection for

19 those people who would come forward and maybe

20 tell -- attempt to tell authorities about what's

21 going on before the fact instead of after the

22 fact?

23 ATTORNEY GENERAL MADIGAN: I'm always in favor

24 of whistle-blower protection. I didn't mean my


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33

1 recommendations to be a comprehensive list because

2 I know that you've heard many recommendations. So

3 absolutely. Whistle-blower protections are

4 probably vital in this circumstance, particularly

5 with what we've seen with Burr Oak.

6 MR. McNARY: Thank you so much.

7 REPRESENTATIVE DAVIS: Thank you, Madam Chair.

8 Thank you very much, Madam Chair.

9 HONORABLE HOLMES: Sure.

10 REPRESENTATIVE DAVIS: Attorney General, are

11 you familiar with the cemetery at 115th and

12 Fairfield?

13 ATTORNEY GENERAL MADIGAN: What's the name of

14 it?

15 REPRESENTATIVE DAVIS: Oh, gee. I don't

16 remember.

17 UNIDENTIFIED SPEAKER: Mount Hope.

18 REPRESENTATIVE DAVIS: Mount Hope.

19 You know about that circumstance where

20 they've also had problems?

21 ATTORNEY GENERAL MADIGAN: Similar to the Burr

22 Oak problems?

23 REPRESENTATIVE DAVIS: Not exactly the same.

24 But -- so if you're not familiar with it, that's


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1 okay.

2 ATTORNEY GENERAL MADIGAN: Well, feel free to

3 call.

4 REPRESENTATIVE DAVIS: Yes. Okay. Thank you

5 very much.

6 REPRESENTATIVE DUNKIN: Thank you, Madam

7 Chair.

8 Attorney General, how are you?

9 THE WITNESS: I'm well, Representative Dunkin.

10 REPRESENTATIVE DUNKIN: You have always been

11 my advocate and certainly my Attorney General on

12 the right issues for me and other Illinoisans as

13 consumers, so thank you for your due diligence.

14 About how many complaints or issues

15 have -- does your office or have your office

16 received over the last several years, let's say

17 from 2005? Any at all or...

18 ATTORNEY GENERAL MADIGAN: I can give you -- I

19 had them run 2008 numbers so last year's numbers.

20 Approximately 70 out of 33,345 complaints, and

21 that would be complaints -- primarily 45 percent

22 of those complaints are going to be regarding

23 funeral homes, 32, 33 percent about cemeteries,

24 and that 11, 12 percent that's left over is going


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35

1 to be about monument services, gravestones.

2 REPRESENTATIVE DUNKIN: Anything that would

3 have given you or your staff indication of sort of

4 the scenario that we experienced at Burr Oak?

5 ATTORNEY GENERAL MADIGAN: We had received no

6 complaints about Burr Oak Cemetery. I've had them

7 check that over the past few months at this point.

8 REPRESENTATIVE DUNKIN: Do you have a staff or

9 unit that's specifically assigned to funerals or

10 cemeteries? None whatsoever?

11 ATTORNEY GENERAL MADIGAN: No. Our Consumer

12 Fraud Bureau takes in consumer fraud complaints on

13 every conceivable topic. And so within that group

14 is where those 70 complaints would come into. But

15 they're -- you know, they're jacks of all trades.

16 They work on complaints regardless of the nature

17 of them.

18 REPRESENTATIVE DUNKIN: Sure. So general

19 complaints. So with certain -- with specific

20 complaints, you would refer them to the

21 appropriate authority or state authority or local

22 authority I would imagine and work with them.

23 ATTORNEY GENERAL MADIGAN: Most of the -- yes.

24 We tend to get consumer fraud complaints. And


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36

1 obviously when we review those, we will determine

2 whether or not there is a separate agency that

3 should handle that or if it is appropriate for us

4 to attempt to mediate that complaint. And so if

5 there's a separate entity, we will make sure that

6 that is where that person and that complaint gets

7 referred to. Oftentimes we will send things to

8 notify, for instance, the Comptroller's Office as

9 well as work on mediation on the consumer fraud

10 side.

11 REPRESENTATIVE DUNKIN: So you did notify the

12 Comptroller's Office in some -- in regard to the

13 funeral and cemetery --

14 ATTORNEY GENERAL MADIGAN: Where it's

15 appropriate. So if it's a pre-needs issue, yes,

16 because they have jurisdiction over that and

17 authority over that. Maintenance issues, yes.

18 REPRESENTATIVE DUNKIN: Maintenance and lots

19 and plots you refer to the Comptroller's office?

20 HONORABLE HOLMES: If it's appropriate to

21 refer to them, they do, yes. But in addition to

22 keeping them. So we give -- we basically send

23 them a copy so they're on notice of what's taking

24 place, and we will work on mediation to resolve


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37

1 the situation. It's all very fact-specific

2 depending on what the complaint is about.

3 REPRESENTATIVE DUNKIN: Thank you, Attorney

4 General.

5 ATTORNEY GENERAL MADIGAN: You're welcome,

6 Representative.

7 HONORABLE HOLMES: Thank you, Representative

8 Dunkin.

9 We have one -- one individual who had

10 their hand up first, and then we'll go to you,

11 Mr. Cage. Thank you.

12 DR. ARNOLD: Thank you --

13 HONORABLE HOLMES: If I may, just for

14 protocol, I would like to remind the members of

15 the task force to please state your name because

16 the proceedings are being taped, and so we want to

17 make sure that the tape recording reflects the

18 speaker.

19 DR. ARNOLD: I'm Damon Arnold, Director for

20 the Illinois Department of Public Health. Thank

21 you again for your service and dedication to the

22 state. You've done great things over time.

23 But one question I have is really

24 regarding the retroactive coverage by law in these


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38

1 situations because many people are now in a

2 situation where they are facing some of the issues

3 and whether, you know, sites that are already

4 established, crypts and those kind of things, are

5 going to be covered by the law once it goes into

6 place.

7 And then the other thing is about

8 consumer education campaign because you mentioned

9 that about going forward. But is there a need to

10 reeducate the public on some of the past practices

11 that have already affected them and their families

12 and people already interred in the cemeteries and

13 may not be aware of some of the consumer

14 protections that are out there or established when

15 they actually laid their loved ones to rest?

16 ATTORNEY GENERAL MADIGAN: Director, I think

17 that's a very good point. You know, I have to

18 presume that one of the unfortunate -- or maybe

19 you would look at it as maybe the silver lining in

20 the Burr Oak situation -- is that many families,

21 regardless of where they have their loved ones

22 buried, have probably gone out to visit and to

23 make sure that they know where that plot is and to

24 look at how the cemetery has been maintained.


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39

1 You know, we have seen an increase in the

2 number of consumer fraud complaints and heard some

3 additional concerns over the past few months,

4 which I think again is a natural outgrowth of the

5 tragedy at Burr Oak. And so to some extent, this

6 tragedy has provided an opportunity to do that

7 consumer education, and obviously the media has

8 helped immensely in that. So I've seen articles

9 and certainly watched programs where, you know,

10 they provided in addition to an update on the Burr

11 Oak situation, you know what you should do when

12 you're thinking about purchasing these services on

13 a pre-need basis, what you should do and expect

14 should a loved one die suddenly and you need to do

15 it on at at-need basis.

16 But we always work and we will continue

17 to work, you know, based on the recommendations

18 and I think ultimately the law that gets amended

19 or passed, to provide that information to members

20 of the public so that they can better protect

21 themselves on the front end of all of these

22 transactions.


24 MR. CAGE: Madam Attorney General, welcome,


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40

1 and I certainly have appreciated your testimony up

2 to this point.

3 My name is Augustus Cage. I'm President

4 and Director of Cage Memorial Chapels and Past

5 President of the Cook County Association of

6 Funeral Home Owners.

7 I was very, very happy to note your

8 recommendation with respect to licensure and

9 training as it involved cemetery personnel

10 management and so forth. To date, cemeteries I

11 think in the main have done a very, very fine job

12 as we work tandemly to serve families. However,

13 there are a number of them -- and I think some of

14 the cemeteries -- cemeterians will agree that

15 training is very, very much important.

16 My question is gonna kind of piggyback

17 something that Representative Davis made reference

18 to: The need to actually have a family go to the

19 cemetery. And the reason I'm kind of reiterating

20 this because I think once the task force forms its

21 recommendations, we'd certainly need some muscle

22 from the AG's office. But nonetheless -- I

23 shouldn't say we need. It would be helpful.

24 But in any event, it is a separate


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41

1 transaction and a separate contract and so forth.

2 And personally as a funeral director -- and I

3 think I speak for my colleagues in that end of the

4 business -- we don't really want to be responsible

5 for other people's money and the contractual

6 commitments therein. So from that standpoint, I

7 would certainly heartily encourage that your

8 recommendations with regard to training and

9 perhaps certification, if not licensure, would

10 certainly be welcome.

11 The other part I was gonna pose a

12 question about. Of the 30-some-thousand

13 complaints that you've gotten, how many, if any,

14 have emanated from the Comptroller's Office to

15 your office and thereby launching an

16 investigation.

17 ATTORNEY GENERAL MADIGAN: That does occur as

18 well, so...

19 MR. CAGE: Any idea about and what proportion

20 is the number?

21 ATTORNEY GENERAL MADIGAN: Well, I can tell

22 you when they reach out to us, it's often so that

23 we can file a lawsuit. So I can tell you that

24 right now across the State of Illinois, in


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42

1 addition to the lawsuit against Burr Oak, there

2 are four other lawsuits against cemeteries. And I

3 can tell you -- let me try to tell you where. One

4 in Rock Island County, one in Peoria County, one

5 in Massac County -- all right. You're gonna force

6 me to look at my little cheat sheet here.

7 Oh, there's the big one down in -- down

8 in Belleville, so in Madison County, against

9 Mid-America Growth and Development Corporation,

10 Forever Illinois. So those are the other sites.

11 So there are a number of other lawsuits.

12 And usually that's the communication with

13 the Comptroller's Office. When they reach out to

14 us, it's so that we can file a lawsuit under these

15 cemetery statutes. And usually because there have

16 been financial irregularities, a receiver needs to

17 be appointed, maintenance problems that have

18 emanated out of those circumstances, misuse of

19 funds.

20 MR. CAGE: Had you ever gotten complaints or

21 specific requests from Mr. Hynes' office to look

22 into the activities of Burr Oak Cemetery?

23 ATTORNEY GENERAL MADIGAN: We did not.

24 MR. CAGE: Never?


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43

1 Thank you very much.


3 One last question which dovetails off of

4 a question from Representative Davis as well.

5 You indicate that you have several

6 lawsuits throughout this state. Given that they

7 are civil in nature, do you believe that the civil

8 penalties are sufficient, or do they need to be

9 enhanced?

10 ATTORNEY GENERAL MADIGAN: The civil

11 penalties -- you know, there's a series of them.

12 So when we bring our lawsuits, it depends what

13 statutes we use. Many of these cases we will also

14 include Consumer Fraud Act claims, and those

15 penalties, you know, $50,000 per violation,

16 $10,000 in addition to that per violation if the

17 crime was committed against somebody over the age

18 of 65. But in drafting our complaints, as any

19 lawyer would do, we also obviously ask the Court,

20 you know, in addition for the penalties and the

21 restitution and whatever else is available any

22 other just relief that the Court would like to

23 give us.

24 So in terms of civil penalties, it is


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44

1 arguable depending on what the circumstances are

2 that they should be enhanced. You know, normally

3 what we're trying to do is to make sure that we

4 can figure out who's making the money, who

5 controls that cemetery, and hold them responsible.

6 Get the cemetery cleaned up, make sure it is sold

7 so that it can continue to accept burials and be

8 maintained.

9 And so outside of that -- and sometimes

10 that's a struggle right there. Sometimes there

11 just isn't the money to even be found to assess

12 additional penalties.

13 HONORABLE HOLMES: Thank you so much, Attorney

14 General. We really appreciate your time and

15 efforts in coming. Your preparation was

16 outstanding, and we will definitely take your

17 recommendations to heart. Thank you.

18 MR. CAGE: Madam Chairman, before you let her

19 go, I did have one question pop to my mind, and

20 please forgive me.

21 In your examination and your --

22 furthering your civil action against the Perpetua

23 Corp. and in particular Burr Oak, and I'm sure

24 you've probably had an opportunity to do some


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45

1 audits and see if there's sufficient monies or who

2 knows if there would be a sufficient amount of

3 money.

4 But I know Mr. Szabelski is going to have

5 ongoing needs for restoration and the completion

6 of his -- I don't know how he does it, but he's

7 got a monumental task. But nonetheless, in your

8 estimation, will there be sufficient monies in the

9 coffers to further his efforts?

10 ATTORNEY GENERAL MADIGAN: There is money in

11 the funds, but it remains to be seen whether or

12 not there will be sufficient monies.

13 So, again, one of the main challenges

14 we're having right now is identifying the

15 individuals, not at Burr Oak, but at that level

16 above the Perpetua Holdings level, who are

17 responsible where that money went.

18 And so, again, yes, there is money. Is

19 it sufficient? I don't have a definitive answer

20 for that at this point.

21 MR. CAGE: Well, because from where we sit,

22 there's three areas of interest from a financial

23 prospective. Number one -- and I don't know which

24 comes first; the chicken or the egg here -- but


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46

1 you've got a civil action in which there will be

2 ensuing penalties. No. 2, I guess some lawyers

3 came on the air very early on in this disclosure

4 that they're forming class action suits. So

5 they're waiting in line. And then third and

6 final, there's Mr. Szabelski who has to see about

7 putting this thing back together.

8 So, you know, you've got three very

9 strong interested parties here, and my concern is

10 because we go there on a regular basis serving our

11 clientele -- and I can speak for the rest of the

12 African-American community in terms of funeral

13 directors -- if there's gonna be, you know,

14 sufficient proceeds to restore this thing?

15 ATTORNEY GENERAL MADIGAN: Again, I don't have

16 a definitive answer to that question right now. I

17 appreciate and understand your concerns. The good

18 thing I can tell you is, is that all of those

19 cases at the state level are in the same

20 courtroom. So at least we've got one judge who is

21 aware of all of these different charges against --

22 HONORABLE HOLMES: Who is that judge? Do you

23 recall.

24 UNIDENTIFIED SPEAKER: Judge Martin Agren,


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47

1 A-G-R-E-N.

2 ATTORNEY GENERAL MADIGAN: There's also a

3 number of federal cases is my understanding.

4 From our perspective, which I think is

5 very similar to yours, you've got to have the

6 receiver in there, determine what happened, find a

7 way to move forward. I understand the significant

8 concerns about being able to resume burials. I

9 know there is a great deal of pressure that

10 funeral directors are under right now in the

11 African-American community because Burr Oak is

12 still a crime scene and, therefore, is not open,

13 not accepting burials. And then also, in terms of

14 other interests, the Court is going to have to

15 contend with the restitution for the families and

16 what are we going to do about their loved ones'

17 remains and re-interring them.

18 MR. CAGE: I guess I was really curious to

19 know what's the pecking order or how did the food

20 chain stack up in this particular situation?

21 ATTORNEY GENERAL MADIGAN: The judge will be

22 the ultimate determiner of that.

23 MR. CAGE: Thank you.

24 HONORABLE HOLMES: Attorney General, I am so


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48

1 sorry, but Mr. Cage just opened a major can of

2 worms, and I'm going to just allow ten seconds to

3 close that can.

4 And if -- Representative Davis has

5 something that she has asked almost every

6 individual --

7 REPRESENTATIVE DAVIS: Well, first of all, I

8 want to thank the Attorney General for her

9 extremely candid and knowledgeable testimony. We

10 thank you so much for that as the chairman has

11 already stated.

12 But my question is: Do you believe --

13 because this is such a sensitive area. So many

14 people have been hurt. They feel like they're

15 burying their relatives all over again. They're

16 going through the grieving process again. And my

17 thought is that perhaps we should require cemetery

18 owners to be residents of the State of Illinois.

19 HONORABLE HOLMES: In answering that, will you

20 also address if you have an opinion as to whether

21 the cemetery owners, any cemetery owner should be

22 insured and/or if they should have a certain

23 amount of money put up in an escrow account to

24 cover situations such as this? So in answering


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49

1 her question, if you could add that to it, I'd

2 appreciate it. Thank you. And I promise this is

3 the last question.

4 ATTORNEY GENERAL MADIGAN: No. That's okay.

5 I'm happy to be here. I'm happy -- this is an

6 important issue. I'm happy to spend my time with

7 you.

8 Whether cemetery owners should be -- of

9 Illinois cemeteries should be residents, as the

10 lawyer for the State, we'll have jurisdiction over

11 them regardless if they're here or not because

12 they're doing business here in the State of

13 Illinois. Our concern, and one of my

14 recommendations regarding the transparency, was

15 because we are already facing a challenge in

16 determining exactly who -- if Perpetua, you know,

17 is in control. Who's financially benefiting?

18 So as long as we have that information

19 and you can require that in terms of the

20 licensure. Corporate structure? Who does what?

21 Where does the money go? If we have that

22 information, I am less concerned that the owner

23 has to be a resident of the state. There may be

24 additional legal complications with attempting to


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50

1 require that.

2 Your second question was insurance --

3 HONORABLE HOLMES: Insurance and possibly

4 escrow or insurance.

5 ATTORNEY GENERAL MADIGAN: Well, that is going

6 to obviously make burial more expensive because

7 that cost will be passed along. And so you're

8 trying to ensure against criminal acts. If it's

9 a -- if it's a de minimis amount and we'd be able

10 then to have funds when tragedies of this nature

11 occur, it's probably something you should

12 consider.

13 I haven't thought about it enough to

14 know -- to give you a definitive I'm absolutely

15 for this or absolutely against it. But I guess I

16 would try to recognize, you know, both sides of

17 it, right, as any good lawyer.

18 So how much of a cost is it going to be

19 on people when they have to bury a family member,

20 which is -- which can already be a very expensive

21 situation versus, you know, how often are we gonna

22 see these criminal situations. One would hope --

23 one would hope we never see what happened at Burr

24 Oak again.


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1 HONORABLE HOLMES: Thank you so much. I truly

2 appreciate your time.

3 ATTORNEY GENERAL MADIGAN: If you need more of

4 my time, I am on the 12th floor. Always happy

5 to be available to any of you.


7 THE WITNESS: Thank you very much.

8 HONORABLE HOLMES: Thank you so much.

9 We'll now hear from our Illinois

10 Comptroller, Dan Hynes.

11 Thank you very much, Mr. Comptroller. We

12 appreciate your willingness to come before our

13 task force to testify.

14 If you have a statement that you'd like

15 to make, we'd like to hear it. Otherwise we'd

16 like to ask questions. It's up to you.

17 COMPTROLLER HYNES: Thank you, Madam Chair. I

18 do have an opening statement, and I'd be happy to

19 answer all questions.

20 I want to thank the task force for your

21 efforts in this -- in the aftermath of this

22 horrible tragedy as we try to pursue reforms that

23 will benefit consumers and protect consumers, both

24 those who have been victimized in Burr Oak, but


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52

1 also in the future to make sure that we have a

2 regulated industry which we do not to date.

3 First, let me again just express my

4 sympathy for the thousands of families and loved

5 ones who were affected by the shocking events at

6 Burr Oak Cemetery because I met with --

7 HONORABLE HOLMES: I apologize for

8 interrupting. I really do. But could you

9 identify the two individuals who are sitting next

10 to you. I --

11 COMPTROLLER HYNES: Thank you. I've lost my

12 manners. Sorry, Madam Chair.

13 Jessica Sohl, who is a staff attorney in

14 the office, and Percy Lucina who is the Director

15 of the Cemetery Care Burial Trust Division.

16 HONORABLE HOLMES: And if they or you can

17 spell the names for the court reporter.

18 MS. SOHL: Sure.

19 HONORABLE HOLMES: Spell the names.

20 MS. SOHL: S-O-H-L.

21 COMPTROLLER HYNES: Jessica.

22 MS. SOHL: Jessica.

23 MR. LUCINA: And I'm Percy, P-E-R-C-Y

24 L-U-C-I-N-A.


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53

1 HONORABLE HOLMES: I apologize again,

2 Mr. Comptroller. You --

3 COMPTROLLER HYNES: Thank you.

4 HONORABLE HOLMES: Please proceed.

5 COMPTROLLER HYNES: I was just expressing my

6 condolences and sympathies for the families of

7 this tragedy.

8 As I went to the cemetery in the days

9 after this horrible discovery at a prayer vigil

10 outside the cemetery and a federal hearing that

11 was conducted by Congressman Bobby Rush and his

12 subcommittee and the families who were there, it

13 is evident that this tragedy has certainly not

14 only brought grieving families to have to grieve

15 again but has really awoken many emotions

16 surrounding the death care industry. And my only

17 hope is that through tragedy we can actually bring

18 about reforms that we've been fighting fo,r, for

19 many years. I think that's what my -- my remarks

20 will be dedicated to as well as I'm sure many of

21 the questions that you'll be asking.

22 As Comptroller, my office has limited

23 legal authority over cemeteries, specifically

24 focusing on consumer funds accepted by the


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1 cemetery that are held in trust with trust

2 earnings to be used for the care of the cemetery.

3 The office also licenses funeral homes

4 and cemeteries that sell pre-need arrangements in

5 advance of death. Under those licenses, the

6 pre-need funds are held in trust until needed to

7 cover funeral and cemetery costs at the time of

8 death. The office requires annual financial

9 reporting and conducts audits to ensure financial

10 compliance. Local government, religious, and

11 fraternal organizations and their cemeteries

12 register with the Office but are not licensed or

13 audited by the Office because state law

14 specifically exempts them.

15 Thus, in Illinois the Office of the

16 State's Chief Fiscal Officer has a limited role in

17 overseeing entrustment at a limited number of

18 cemeteries and funeral homes.

19 The State Department of Financial and

20 Professional Regulation issues licenses for

21 funeral directors and embalmers and is supposed to

22 regulate the operations of most trust fund --

23 trust funds through the Divisions of Banks and

24 Trusts.


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1 The Department of Insurance has a role

2 when insurance policies are used by consumers or

3 trustees as investment vehicles. Also the State

4 Department of Health has certain regulations

5 pursuant to the State Vital Records Act concerning

6 permits, death certificates, and the like. And,

7 of course, the Department of Human Services

8 administers grants to pay for Medicaid burials.

9 However, there is no regulation of most

10 at-need sales. There is no real regulation of

11 cemetery maintenance or operations, and there is

12 at best minimal oversight of nontrust fund record

13 keeping. In short, there is a regulatory vacuum

14 in Illinois.

15 A decade ago when I was elected

16 comptroller, I held hearings around the state

17 about cemetery and funeral home issues. The most

18 common complaint was inadequate or poor

19 maintenance. Thus, when I proposed legislative

20 reforms to address concerns about the death care

21 industry, I included a minimum maintenance

22 standard. Unfortunately, despite several years of

23 trying, that provision did not make it through the

24 legislative process, largely because of the


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1 influence of the death care industry at our state

2 capital.

3 However, in 1999, 2001, 2002, we were

4 able to successfully expand some consumer

5 protections within the limited areas of pre-need

6 sales, care fund entrustment, and licensing of

7 crematories. In each case the bill I proposed was

8 watered down through industry lobbying, and other

9 reform bills were outright opposed and killed by

10 industry opposition in 2000, 2005 and 2007.

11 This past spring I proposed and the

12 general assembly passed legislation to further

13 strengthen trust fund regulation by requiring that

14 all trust funds be held by an independent trustee

15 that is a corporate fiduciary. These trustees

16 are, therefore, regulated either at the state

17 level by the Illinois Department of Financial and

18 Professional Regulation or at the federal level by

19 the Comptroller of the Currency or the Office of

20 Thrift Supervision.

21 I was pleased this legislation had the

22 support of IDPFR, IDFPR, the AARP, and Citizen

23 Action. The Governor recently issued a mandatory

24 veto of that legislation to change the effective


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1 date from January 1st, 2010, to January 31st,

2 2010. This veto by the Governor to change the

3 effective date by 30 days I believe jeopardizes

4 these hard-fought consumer protections, and I hope

5 that we can make it through to make that

6 legislation become law.

7 I also urge this task force to further

8 recommend the reforms included in the legislation

9 I put forward if July in the wake of the Burr Oak

10 tragedy. Led by my office, we worked with Rainbow

11 Push, the Cook County State's Attorney, the Cook

12 County Sheriff's Office, and the Recorder of

13 Deeds, individual legislators, legislative staff,

14 and others to produce comprehensive legislation

15 that addressed the issues in the death care

16 industry.

17 Among the specific reforms included were:

18 Licensing and continuing education of cemeteries

19 and salespeople, mandatory recording of both the

20 purchase of cemetery plots and of burials via the

21 Recorder of Deeds and the death certificate

22 process respectively, minimum maintenance

23 standards for cemeteries, Crime Victim's

24 Compensation and enhanced criminal penalties to


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1 address the criminal actions perpetrated at Burr

2 Oak as well as an adequate reimbursement for

3 public aid burials.

4 I've been fighting for reforms in the

5 regulation of the death care industry for over a

6 decade now. During that time reforms have been

7 fought vigorously by industry lobbyist.

8 I want to point out that I do not accept

9 campaign contributions from the cemetery and

10 funeral home industry or their political action

11 committees. Though I firmly believe that a

12 majority of funeral homes and cemeteries in our

13 state are run by decent, hard-working men and

14 women who truly care for their customers, I do not

15 want there to be any conflict of interest on my

16 behalf when it comes to fighting for consumers.

17 Avoiding that conflict has given me the

18 freedom to aggressively use what regulatory

19 authority the Office of Comptroller affords me.

20 Sometimes it has been simple things, like the

21 creation in 1999 of a toll-free hotline for

22 consumers to call with questions or complaints.

23 Other times it has been more complicated, like the

24 2002 investigation and administrative action


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1 against multi-million dollar, multi-state death

2 care corporations that lead to payments of

3 $2.3 million from Alderwoods and $309,000 from

4 SCI, a conglomerate. Combined these two

5 corporations operated 62 cemeteries and 194

6 funeral homes here in Illinois.

7 As we proceed today, you will know how --

8 you might hear about the Illinois Funeral

9 Directors Association. This is where auditors

10 from my office uncovered millions of dollars in

11 excess fees, millions more in excess credits to

12 member funeral homes, and a massive accounting

13 fraud. Again, instead of rushing out with a press

14 release, my office worked with appropriate state

15 and federal authorities, like state insurance,

16 trust fund, and securities regulators, none of

17 whom investigated IFDA's unlawful practices until

18 my office uncovered the fraud.

19 And more recently a multimillion dollar

20 federal lawsuit was filed in St. Louis against the

21 owners and affiliates of National Prearranged

22 Services, Inc., NPS. This alleged scam involved

23 approximately 149,000 consumers in 47 states. In

24 the pages of that legal filing, you can read about


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1 the work that my office did of necessity behind

2 the scenes and in cooperation with other

3 regulators and law enforcement. We uncovered

4 evidence of systemic contract tampering involving

5 thousands of consumers contracts, and we

6 diligently worked with the appropriate state and

7 federal authorities. That work was not intended

8 to generate headlines; rather it was intended to

9 bring about results. That work led not only to a

10 private lawsuit but a Federal Grand Jury

11 indictment.

12 In addition, my office has a long record

13 of going after bad actors in the death care

14 industry across the state:

15 Revoking the license of Larry Leach at

16 Springdale Cemetery in Peoria and successfully

17 negotiating an intergovernmental agreement to

18 maintain the cemetery.

19 Recovering nearly a million dollars in

20 restitution for pre-need consumers of Thomas

21 Mortuaries in Granite City.

22 $66,000 in restitution for consumers of

23 Smith Funeral Home in Paris, Illinois.

24 $39,000 for consumers of Roebuck Funeral


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1 home in Rockford.

2 $142,000 for consumers of Weber McCann

3 Funeral Home in Chillicothe, Illinois.

4 $1.4 million in restitution and fines

5 from the owners of Burke-Tubbs Funeral Home in

6 Freeport.

7 $150,000 for consumers of Warren County

8 cemetery.

9 Court action against Drexel Funeral Home

10 in Maywood for unlicensed pre-need sales.

11 $26,600 in restitution and fines from the

12 owners of Senesac Funeral Home in Kankakee.

13 Revoked the license of Spady Community

14 Funeral Home in Decatur for violations of the

15 Funeral or Burial Funds Act.

16 Investigated and performed an audit of

17 Staab Funeral Home in Springfield resulting in a

18 change in trust fund investment practices.

19 $240,000 in excess fees returned to

20 funeral homes from FDSA after an investigation and

21 an order from my office.

22 Court action against Prime Acquisition

23 Group and Prime Succession, Inc., for failure to

24 entrust consumer funds and an attempted massive


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1 corporate buyout by a Florida firm of Illinois

2 funerals homes.

3 Shut down Werner Mick Funeral Home and

4 Cremation Specialists in Pontoon Beach, Illinois,

5 for operating an unlicensed crematory and

6 violations of the Funeral or Burial Funds Act.

7 Revoked the license of William Mortuary

8 in Alton for violations of the Funeral or Burial

9 Funds Act.

10 Court action against Richard Cody and

11 Roselawn Memorial State Cemetary in Moline for

12 unlicensed pre-need sales and failure to entrust

13 consumer funds including $1.75 million judgment

14 entered just last week in Rock Island Circuit

15 Court.

16 Shut down and revoked the license of

17 Larson Funeral Home in Rock Island for violation

18 of the Funeral or Burial Funds Act.

19 Revoked the license of Twin City Memorial

20 Chapel in Champaign for violations of the Funeral

21 or Burial Funds Act.

22 Court action including the appointment of

23 a receiver for Metropolis Memorial Gardens in

24 Metropolis, Illinois for numerous violations of


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1 cemetery and consumer protection laws.

2 Revoked the license of Wilton Cemetery

3 LLC for American Mausoleum in Peoria following a

4 bankruptcy filing and subsequent advocating for

5 consumers in cases in federal and state court

6 including the appointment of limited receiver over

7 the trust funds.

8 And with the assistance of the Attorney

9 General's Office, we successfully prosecuted

10 Conboy-Westchester Funeral Home employee Anthony

11 Kripas for stealing $32,655 in pre-need funds from

12 consumers. This was especially significant

13 because Mr. Kripas was a member of the Department

14 of Professional Regulations Funeral Directors and

15 Embalmers Licensing and Disciplinary Board.

16 This doesn't include the countless

17 tragedies averted through my office's scrutiny of

18 licenses.

19 For example, in 2007 Tennessee and

20 Michigan saw an embezzlement scandal that costs

21 consumers over $90 million. Illinois was

22 untouched by the Clayton Smart scandal because in

23 2006 my office put a stop to suspicious trust fund

24 activities by the Decatur-based Quantum Inc. And


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1 in 2007 we stopped an Illinois cemetery from

2 transferring their trust funds to Security

3 Financial Management. Both Quantum, Inc. and

4 Security Financial Management are tied to

5 Mr. Smart. Mr. Smart goes on trial in Memphis,

6 Tennessee this coming January.

7 To sum it up, the Comptroller's Office

8 has a limited authority over certain entrustment

9 requirements in the death care industry. During

10 my tenure I have sought to increase consumer

11 protections, sometimes over the vigorous

12 opposition of industry lobbyists. And my office

13 has used our existing regulatory powers, often in

14 conjunction with other state and federal

15 authorities, to crack down on bad actors and

16 provide restitution for consumers.

17 This task force was formed in the wake of

18 a horrendous tragedy. Now we have a choice. We

19 can choose the hardest public outrage and media

20 attention to push through long-neglected reforms,

21 and I believe that is the right choice.

22 American history is replete with examples

23 of how tragedies can help overcome industry

24 resistance to change.


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1 The 1911 Triangle Shirtwaist fire led to

2 legislation that improved working conditions in

3 factories.

4 Here in Chicago the 1903 Iroquois Theater

5 fire and the 1958 Our Angels -- Our Lady of the

6 Angels School Fire led to the adoption of building

7 safety codes.

8 The 1978 Love Canal Tragedy led to the

9 adoption of major environmental protections.

10 In all of these cases, industry had long

11 opposed the needed reforms. Their lobbyists

12 killed them in Congress and then state

13 legislatures. It was only after a tragedy

14 galvanizing public opinion that reform could

15 finally be pushed through and the publi

Documents

CEMETERY OVERSIGHT TASK FORCE MEETING Thursday, … › publicincludes › statehome › ...Cemetery Oversight Hearing September 10, 2009 Tel: (312) 386-2000 (800) 868-0061 Merrill